Texans in Medicaid gap can avoid fine for being uninsured

Many not eligible for health subsidies

At least 1 million Texans falling into the so-called coverage gap — those ineligible for health insurance subsidies and Medicaid — won’t have to pay a penalty for being uninsured in 2014, health policy analysts said.

That’s because Texas is one of the states that chose not to expand Medicaid eligibility requirements under the Affordable Care Act. As a result, a person earning less than $11,670 annually or a family of four earning a household income of less than $23, 850 per year — but deemed ineligible for health insurance tax credits and for Medicaid — will not be subject to the penalty.

Such taxpayers will not have to apply for the exemptions but simply report them on their tax returns, said officials with the Austin-based Center for Public Policy Priorities and the national group Enroll America.

“This is basically simplifying the paperwork for Texans and people in other states that haven’t done Medicaid expansion,” said Anne Dunkelberg, associate director of the center’s health and wellness program. “I guess that makes sense because it’s not their fault that they’re not covered and because it’s a lot of people.”

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Avoiding the penalty

Some Texans who shunned health insurance in 2014 could avoid a penalty at tax time.

Those in the Medicaid gap — earning less than the federal poverty level and not able to qualify for a subsidy or for Medicaid. They can report their status directly to the IRS on their 2014 tax return.

Hardship exemptions are granted to the homeless, those evicted in the past six months, those facing eviction or foreclosure, recent victims of domestic violence, those who filed for bankruptcy in the past six months and others. Applications must be submitted by mail to the health insurance marketplace.

Help applying for such waivers is available at enrollment events and some community health centers such as CommuniCare.

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The penalty, known by the IRS as the “individual shared responsibility payment,” generally will be imposed on individuals and families who chose not to get health insurance this past year.

The fine amounts to $95 for each adult and $47.50 for each child or 1 percent of the family’s household income. If those calculations result in two different numbers, the family must pay the larger of the two amounts. Payment is due when the federal income tax return is filed.

That penalty will increase in the years to come. For those who don’t buy health insurance in 2015, the fine will surge to $325 per adult and $162.50 per child or 2 percent of household income. It will become even more punitive in 2016 and beyond, soaring to $695 per adult and $347.50 per child or 2.5 percent of household income.

An estimated 1 million to 1.3 million Texans fall into the coverage gap, many of them parents, Dunkelberg said.

“Texas hasn’t done any Medicaid expansion for adults, and we never covered any adults unless they were fully disabled or seniors or pregnant,” she said. “And we chose to only cover a tiny handful of parents. So we have 3 million children on Medicaid — and less than 150,000 of those children’s parents qualify.”

Texas leaders so far have opposed expanding Medicaid eligibility requirements because of concerns that such a move could burden taxpayers with more public debt.

But those in the coverage gap aren’t the only ones who can avoid the penalty.

Taxpayers also can formally apply for so-called “hardship exemptions” to avoid paying it. Such waivers may be granted to the homeless, those evicted in the past six months, those facing eviction or foreclosure, those who received a disconnection notice from a utility company or those who filed for bankruptcy in the past six months, according to the federal HealthCare.gov website.

Hardship exemptions also may be granted to recent victims of domestic violence, survivors who suffered the recent death of a close family member, those unable to pay medical expenses in the past two years that resulted in substantial debt, those incurring unexpected cost increases to care for a sick or aging relative or those who suffered significant damage to property because of fire, flood or other disaster, HealthCare.gov said.

Supporting documentation will be required in most cases when applying for the exemptions.

Consumers who need help applying for hardship exemptions or proving that they were denied Medicaid benefits can call the health insurance marketplace at 800-318-2596. They also can consult with certified application counselors or assistants at some CommuniCare Health Centers, said Chief Revenue Officer Quiara Sherrard. They should call 210-233-7157 to make an appointment.

Similar help is available at other enrollment events happening locally, such as those hosted by Enroll SA.

Taxpayers approved for a hardship waiver will be given an exemption certificate number, which they must put on their federal income tax return.

Taxpayers cannot apply for such exemptions online, said Zach Baron, senior policy analyst at Enroll America. Rather, a paper application obtained from the HealthCare.gov website or at an enrollment event must be sent by mail to the federal health insurance marketplace. The sooner they do this, the better, Baron said.

“It’s easiest if they apply as soon as they can over these next few weeks or months so that they can receive a determination from the marketplace,” Baron said.

The U.S. Health and Human Services Department has stipulated a goal of approving hardship exemption applications within one to two weeks of receipt. That could be a challenge as the department receives more applications closer to the tax filing deadline.

Peggy O’Hare reports on housing, demographics and the census for the San Antonio Express-News’ Metro Desk. She joined the Express-News in April 2013. She is a former reporter at the Houston Chronicle, where she worked for 11 years. She is a graduate of Texas A&M University.